EU's six largest economies agree a blueprint for a 'Savings and Investment Union' to rival Wall Street
The finance ministers of France, Germany, Italy, the Netherlands, Spain and Poland -- the "E6" -- agreed at a Berlin mini-summit on the outline of a "Savings and Investment Union" meant to turn the EU into a market that can rival Wall Street and the City of London. The plan would upgrade the European Securities and Markets Authority into a single bloc-wide supervisor and channel some of the EUR11 trillion that EU households hold in cash savings into the economy. The six must now win at least nine more governments before presenting the deal to all EU finance ministers on June 12, with Ireland, Luxembourg and Cyprus already wary of a "two-speed Europe."
The finance ministers of France, Germany, Italy, the Netherlands, Spain and Poland emerged from a mini-summit in Berlin on Thursday with the contours of a deal to build a U.S.-style financial market in Europe, one they hope can rival Wall Street and the City of London. The group, known as the E6, published a joint statement on Friday saying they had "striven to find a balanced compromise that reflects our stance and may serve as a contribution for further discussions in the Council." The agreement was hammered out away from the slower legislative track in Brussels, where treasury officials have been negotiating a parallel EU bill dubbed MISP.
The aim is a "Savings and Investment Union" that makes it easier for insurers, fund managers and ordinary savers to pour money into the bloc's economy at a time when back-to-back crises have limited what governments can spend. EU citizens hold an estimated EUR11 trillion of cash sitting in bank accounts, and policymakers want professional financiers and households to do more of the heavy lifting. Central to the plan is upgrading the European Securities and Markets Authority (ESMA) into a single supervisor for the bloc, taking on powers that currently sit with national regulators.
The hard part is now political. After forming their own splinter group, the six must persuade their remaining 21 peers to join without appearing to ignore them: they need at least nine more countries to reach the threshold of 15 nations representing 65 percent of the EU's population required to pass the reforms through the Council. The E6 will present their agreement at the next meeting of EU finance ministers, the Ecofin council, on June 12 in Luxembourg. Smaller financial centers, including Ireland and Luxembourg, fear being sidelined, and Cyprus' Finance Minister Makis Keravnos, who chairs Ecofin, warned that "a separate structure" was not feasible "because it would conflict with the prevailing perception in all member states today that fragmentation must stop."
The broad strokes also paper over divisions within the six. All agree on turning ESMA into a bloc-wide supervisor but differ on speed: the compromise calls for a phased transfer of powers over a transition that "should be appropriate and as short as possible," leaving the timeframe open. Italy and the Netherlands had initially floated a transition of up to eight years, though Dutch Finance Minister Eelco Heinen pushed for a shorter period during Thursday's talks. On crypto -- currently policed nationally -- the six agreed that "significant" firms should fall under ESMA while smaller players remain under national oversight.